Hanemp Properties Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 6007/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86479 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 30-12-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 03-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C NEW DELHI BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI A.T. VARKEY , JUDICIAL MEMBER ITA NO. 6007/DEL/ 2012 ASSTT. YEAR 2006-07 HANEMP PROPERTIES PVT. LTD. VS. DCIT G-12, SOUTH EXTENSION-1, CIRCLE-12(1) NEW DELHI. NEW DELHI. (PAN AAACH0811M) (APPELLANT) (RESPONDENT) APPELLANT BY :SHRI UMESH GUPTA, CA RESPONDENT :SHRI SATPAL SINGH, SR. DR O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THE IS AN APPEAL FILED BY THE ASSESEE D IRECTED AGAINST THE ORDER OF LD. CIT(A)-X, NEW DELHI DATED 10.10.2012 FOR ASSTT. YE AR 2006-07. 2. FACTS IN BRIEF: THE ASSESSEE IS A COMPANY, ENGAGED IN THE PURCHASE, SALE AND RENTING OF PROPERTIES. THE ISSUE THAT ARISES BEFORE US IS, WHETHER THE INCOME THAT AROSE TO THE ASSESSEE ON SALE OF PROPERTY, SHOULD O N THE FACTS AND CIRCUMSTANCES OF THE CASE, BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS OR UNDER THE HEAD CAPITAL GAINS. 3. THE ASSESSEE CONTENDS THAT ITS PRIMARY SOURC E OF INCOME IS ON ACCOUNT OF A) DIVIDEND B) INTEREST AND C) RENTAL. HE FURTHER SUBM ITS THAT THE ASSET IN QUESTION WAS PURCHASED BY THE ASSESEE IN THE YEAR 1983 AND RENTA L INCOME WAS DERIVED THERE ITA . NO.6007/DEL/2012 AY 2006-07 2 FROM. IT IS FURTHER CONTENDED THAT THIS ASSET WAS D ISCLOSED AS INVESTMENT OF THE ASSESSEE. IT IS SUBMITTED THAT THE INTENTION OF THE ASSESSEE IN PURCHASING THE PROPERTY WAS TO EARN RENTAL INCOME AND HENCE IT WAS NEVER TREATED AS THE ASSESSEES STOCK IN TRADE. IT IS CONTENDED THAT IN THE EARLIER ASSESSMENT YEARS SIMILAR SALE OF HOUSE PROPERTIES, WERE TREATED AS SALE OF CAPITAL A SSETS AND INCOME THERE FROM ASSESSED UNDER THE HEAD CAPITAL GAINS. 4. LD. DR CONTENDS THAT THE PRIMARY PURPOSE FO R WHICH THE ASSESSEE HAS BEEN FORMED, IS TO PURCHASE OR LEASE EXCHANGE OR OTHERW ISE SELL, HOLD, DEVELOP IMMOVABLE PROPERTIES ETC. IT IS SUBMITTED THAT THE ASSESSEE HAS NO STOCK-IN-TRADE AND IT HAS INTENTIONALLY DISCLOSED ALL THESE PROPER TIES UNDER THE HEAD INVESTMENTS. RELIANCE IS PLACED ON THE MAIN OBJECT OF THE MEMORA NDUM OF ASSOCIATION AND THE ASSESSING OFFICERS FINDING THAT THE INCOME SHOULD BE ASSESSED UNDER THE HEAD CAPITAL GAINS WAS SUPPORTED. 5. ON A CAREFUL CONSIDERATION OF THE FACTS AN D CIRCUMSTANCES OF THE CASE AND A PERUSAL OF THE PAPERS ON RECORD AND THE ORDERS OF T HE AUTHORITIES BELOW WE HOLD AS FOLLOWS :- 5.1 THE PROPERTY IN QUESTION IS, 227, YUSUF S ARAI, NEW DELHI. THIS PROPERTY WAS ACQUIRED BY THE ASSESSEE COMPANY IN THE YEAR 1983. THUS IT IS HELD BY THE ASSESSEE FOR MORE THAN 22 YEARS. THE FIRST APPELLATE AUTHORI TY IN HIS ORDER ADMITS THAT THE ASSESSEE HAS CLASSIFIED THIS ASSET, IN ITS BOOKS OF ACCOUNTS AS AN INVESTMENT. THE ASSESSEE WAS EARNING RENTAL INCOME AND THIS RENTAL INCOME WAS BEING DISCLOSED AS INCOME FROM HOUSE PROPERTY IN THE HANDS OF COMPANY OVER THE YEARS. SIMILAR SALES FOR THE EARLIER ASSTT. YEARS 2000-01 AND 2001-02 WE RE ASSESSED AS INCOME FROM ITA . NO.6007/DEL/2012 AY 2006-07 3 CAPITAL GAINS IN ORDERS PASSED U/S 143(3) BY THE AO . AS RIGHTLY POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE, THE OBJECTS OF THE ASSESS EE COMPANY, AS IN THE CASE OF ALL OTHER COMPANIES, ARE DRAFTED IN A VERY BROAD MANNER , SO AS TO ENABLE THE COMPANIES TO UNDERTAKE ANY ACTIVITY THAT THEY MAY DESIRE IN T HE FUTURE. THIS DOES NOT MEAN THAT THE ASSESSEE HAS BEEN DOING THE BUSINESS, AS SPECIF IED IN ALL THE OBJECTS IN THE MEMORANDUM OF ASSOCIATION. 6. ON A CONSPECTUS OF THE FACTS AND CIRCUMSTANC ES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT SUBMISSIONS OF LD. COUNSEL FOR THE ASSESSEE HAVE TO BE UPHELD. WE DIRECT THE AO TO ASSESS THE INCOME THAT AROSE TO THE ASSESSEE COMPANY ON ACCOUNT OF SALE OF THE PROPERTY IN QUESTION, UND ER THE HEAD LONG TERM CAPITAL GAINS. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH JANUARY, 2015. SD/- SD/- (A.T. VARKEY) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 6 TH JANUARY, 2015 VEENA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER DEPUTY REGISTRAR